On Monday in the Southern District of New York, an individual filed a complaint against Alexion Pharmaceuticals Inc. and its board of directors, alleging violations of the Securities Exchange Act in connection with information the company shared related to its proposed merger with AstraZeneca PLC.
On Dec. 12, 2020, biopharmaceutical company Alexion announced that it would be acquired by AstraZeneca. Pursuant to the merger agreement, Alexion shareholders were to receive 2.1243 AstraZeneca American depositary shares and $60 per share of Alexion they already owned.
Alexion authorized its registration statement on Feb. 19 with the Securities and Exchange Commission (SEC), recommending that shareholders vote in favor of the acquisition. Despite the defendants’ obligation to review the registration statement to make sure it did not omit or misrepresent any information about the transaction, plaintiff Jonathan Raul, an Alexion shareholder, argued that the statement did misrepresent and omit information that shareholders need to know before voting in favor of the transaction.
The plaintiff contended that the company’s projections listed in the registration statement were insufficient, as they did not employ generally accepted accounting principles (GAAP). According to the complaint, the SEC released guidance in May 2016 that said companies must “provide any reconciling metrics that are available without unreasonable efforts.”
“In order to make management’s projections included in the Registration Statement materially complete and not misleading, Defendants must provide a reconciliation table of the non-GAAP measures to the most comparable GAAP measures,” the complaint said.
The complaint also alleged that the financial analyses and opinion of Bank of America Securities in the registration statement did not contain material information by “fail(ing) to disclose the individual multiples and metrics for each of the companies observed in the analyses” and other purported key information for shareholders.
“(T)he disclosure of projected financial information is material because it provides shareholders with a basis to project the future financial performance of a company and allows shareholders to better understand the financial analyses performed by the Company’s financial advisor in support of its fairness opinion,” the complaint claimed.
The plaintiff is seeking an enjoinment of the defendants from pursuing the proposed merger, an amendment to the registration statement that has remedied the alleged deficiencies, and monetary damages, among other relief.
Plaintiff Raul is represented by Lifshitz Law Firm P.C.
